Fiscal prudence to tackle inflation may lead to global slowdown: Ratan Tata

NEW DELHI: Tata Group Chairman Ratan Tata has cautioned that "self-imposed fiscal prudence" to tackle inflation, mainly in India and China, could cause another global slowdown.

Addressing shareholders of group firm Tata Motors in the Annual Report for 2010-11, Ratan Tata said: "Inflation is indeed a lurking enemy of healthy growth and needs to be controlled."

Yet, there was a need to strike a balance between controlling inflation and driving economic growth failing which there could be another global slowdown, he said.

"What should be of concern to all is the creation of a situation where the pendulum swings too far in the opposite direction, causing another slowdown this time, not based on over-valued assets but on self-imposed fiscal prudence," he said. The chief of the $67.4 billion group said the health of the world economy in 2012 and beyond will depend more heavily on the economic health of Asia and "the extent of economic slowdown in Asia would depend on the severity of the anti-inflationary measures adopted."